Reference no: EM132727984

Limelight Company records these journal entries:

Prepaid insurance expired$53

Accrued rent expense$28

Salaries previously accrued are paid $27

Common stock is issued for cash$35

Problem 1: Indicate the net effect of these journal entries (i.e., combined effect of all four journal entries) on the following items. Indicate the dollar amount of the net effect and the direction of the net effect. (Example: $13 Increase, or $8 Decrease, or No Effect.) Hint: Prepare the journal entries.

Net Income
Total Assets
Total Liabilities
Retained Earnings
Total Equity
Working Capital

Rocinante, LLC fails to record these journal entries:

Accrued interest revenue$8

5Payment of salaries payable$25

Cash payment for advertising services$12

Problem 2: Determine the net effect of these errors (i.e., combined effect of all three errors) on the following items. Indicate the dollar amount of the net error and the direction of the net error. (Example: $17 overstated, or $12 understated, or No Error.) Hint: Prepare the journal entries

Net Income
Total Liabilities
Total Assets
Retained Earnings